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from Expert Zone:

Little chance of an RBI rate cut

(Any opinions expressed here are those of the author and not necessarily those of Thomson Reuters)

At the Reserve Bank of India (RBI) monetary policy review in August, India’s policy parameters looked encouraging but the central bank was not eager to make any significant change to monetary policy - and none at all to the interest rate. Since then, perspectives have changed. And yet, it is unlikely that the RBI will make any cut, though desirable, to the interest rate.

 Reserve Bank of India (RBI) Governor Raghuram Rajan attends a news conference in New Delhi March 7, 2014. REUTERS/Adnan Abidi /Files

In August, there was a little more cheer. The RBI’s assessment was that global economic activity was picking up, investor appetite had buoyed the financial market and there was a flood of portfolio investment into emerging market economies.

After stagnancy in industry, sentiment was reviving in India and growth in the manufacturing sector had firmed up. The same was true for exports. Retail inflation had eased for a second consecutive month although upside risk remains.

from Expert Zone:

India Markets Weekahead: ‎Tough for the Nifty to break out of its range

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The Nifty continued its upward trajectory to close at a two-week high of 7,792 in a holiday-truncated week. However, this optimism was not reflected in the broader market, especially the mid caps and small caps.

Among the sectors, public sector banks, realty, infrastructure and capital goods, which led the rally earlier, have underperformed in the last few weeks whereas defensives such as FMCG, pharma and IT stood out, an irony when markets are close to a record high.

from Expert Zone:

India Markets Weekahead: Tough for Nifty to climb above 7,800

(Any opinions expressed here are those of the author and not of Thomson Reuters)

Indian markets were unaffected by the week's international developments, with some help from encouraging domestic macro data and a pep talk by Finance Minister Arun Jaitley in post-budget discussions.

The Nifty recovered from the previous week's losses, closing 2.67 percent up at 7664. Positive IIP data was followed by benign inflation at 5.43 percent, a four-month low. Monsoon rains, which had been playing truant, recovered substantially with the deficit shrinking to 15 percent below average last week and covering the entire country.

from Expert Zone:

Markets Weekahead: After new Modi govt, correction to continue for a few weeks

(Any opinions expressed here are those of the author and not of Thomson Reuters)

After a dream run for markets, we witnessed a correction last week with the Nifty declining about 1.86 percent to close at 7,229. The smaller stocks also paused -- the NSE mid-cap index lost about 4.5 percent.

Incidentally, India entered the top 10 markets in terms of market capitalization and we should soon cross the market capitalization of US $ 1.5 trillion once the upswing resumes.

from Expert Zone:

The rupee at a crossroads

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The rupee was tossed around quite a bit in the last 10 months. It dropped to a low of nearly 69 to the dollar, creating an economic crisis, before it recovered and is now at 59-60. The threat is not that it may drop once again, but that it may appreciate further and upset the economy in other ways.

Why would the rupee appreciate? Because there are expectations the Narendra Modi government will facilitate development and enable the economy to get back on course. This is what drove the Sensex beyond 25,000. But the currency market was more stable in spite of the huge inflow of $2.2 billion in 10 trading days of May.

from Expert Zone:

A shortcut to industrial recovery

(Any opinions expressed here are those of the author and not of Thomson Reuters)

A worker sprays water over piles of coal at Mundra Port Coal Terminal in the western Indian state of GujaratThe rate of growth in infrastructure industries falling to 2.6 percent in FY2013-14 came as a shock. That’s because these industries had been consistently growing at relatively high rates in the previous three years, in spite of the drop in production in other industries.

Infrastructure industries include coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity. Production of natural gas has been shrinking since FY2011-12. Even so, the infrastructure group maintained steady growth between 5 percent and 6 percent. The sharp drop last year was caused by lower growth in the steel and cement industries.

from Expert Zone:

India Market Weekahead: Ride the election rally with some caution

(Any opinions expressed here are not those of Thomson Reuters)

The Nifty touched a high of 6758 during the week, part of a market rally for 10 consecutive sessions - the longest streak in five years.‎ An overdue correction set in towards the end of the week with the Nifty ending flat at 6694.

Advance-decline data suggests that interest is shifting to the small and mid-cap space where advances outpaced declines. Although we are touching new highs, the missing euphoria indicates investor caution  that is good for the health of the market.

from India Insight:

Bandhan eyes India’s banking league with RBI licence

Kolkata-based Bandhan Financial was little known in India’s corporate arena. But a new banking licence from the Reserve Bank has given Managing Director Chandra Shekhar Ghosh and his 13,000 employees a reason to cheer.

“This is a different type of win. In the last 13 years they (employees) have been working hard and now they have got the recognition,” said Ghosh. “I hope that this is not a big challenge, the challenge is to develop the skills of the staff, it will take some time.”

from Expert Zone:

How much inflation is good for growth

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The RBI has left it to the government to decide the inflation target since it considers it politically sensitive. The central bank will accordingly modulate its monetary policy to ensure that the government's target is not exceeded.

Targeting inflation alone cannot be the sole objective of monetary policy, though it is an important criterion for regulating the repo rate. Even developed countries have concerns about inflation - when it is too low or too high.

from Expert Zone:

Interest rates likely to remain high

(Rajiv Deep Bajaj is the Vice Chairman and Managing Director of Bajaj Capital Ltd. The views expressed in this column are his own and do not represent those of Thomson Reuters)

The Reserve Bank of India (RBI) raised its benchmark repo rate by 25 basis points to 8 percent at its policy review meet in January. The reverse repo rate rose to 7 percent while the bank rate and marginal standing facility rate climbed to 9 percent. This is the third hike in repo rate since RBI Governor Raghuram Rajan assumed office in early September.